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Key Differences

Know the Differences & Comparisons

Difference Between Domestic and International Business

Last updated on October 7, 2017 by Surbhi S

domestic vs international businessTrade refers to the exchange of goods and services for money, which can be undertaken within the geographical limits of the countries or beyond the boundaries. The trade which takes place within the geographical boundaries of the country is called domestic business, whereas trade which occurs between two countries internationally, is called international business.

Entities engaged in international business often face more difficulties than the entities which conduct domestic business. Although international business enjoys large customer base as they operate in multiple countries. Here is an article which compiles the important differences between domestic and international business.

Content: Domestic Business Vs International Business

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Conclusion

Comparison Chart

Basis for ComparisonDomestic BusinessInternational Business
MeaningA business is said to be domestic, when its economic transactions are conducted within the geographical boundaries of the country.International business is one which is engaged in economic transaction with several countries in the world.
Area of operationWithin the countryWhole world
Quality standardsQuite lowVery high
Deals inSingle currencyMultiple currencies
Capital investmentLessHuge
RestrictionsFewMany
Nature of customersHomogeneousHeterogeneous
Business researchIt can be conducted easily.It is difficult to conduct research.
Mobility of factors of productionFreeRestricted

Definition of Domestic Business

The business transaction that occurs within the geographical limits of the country is known as domestic business. It is a business entity whose commercial activities are performed within a nation. Alternately known as internal business or sometimes as home trade. The producer and customers of the firm both reside in the country. In a domestic trade, the buyer and seller belong to the same country and so the trade agreement is based on the practices, laws and customs that are followed in the country.

There are many privileges which a domestic business enjoys like low transaction cost, less period between production and sale of goods, low transportation cost, encourages small-scale enterprises, etc.

Definition of International Business

International Business is one whose manufacturing and trade occur beyond the borders of the home country. All the economic activities indulged in cross-border transactions comes under international or external business. It includes all the commercial activities like sales, investment, logistics, etc., in which two or more countries are involved.

The company conducting international business is known as a multinational or transnational company. These companies enjoy a large customer base from different countries, and it does not have to depend on a single country for resources. Further, the international business expands the trade and investment amongst countries.

However, there are several drawbacks which act as a barrier to entry in the international market like tariffs and quota, political, socio-cultural, economic and other factors that affect the international business.

Key Differences Between Domestic and International Business

The most important differences Between domestic and international business are classified as under:

  1. Domestic Business is defined as the business whose economic transaction is conducted within the geographical limits of the country. International Business refers to a business which is not restricted to a single country, i.e. a business which is engaged in the economic transaction with several countries in the world.
  2. The area of operation of the domestic business is limited, which is the home country. On the other hand, the area of operation of an international business is vast, i.e. it serves many countries at the same time.
  3. The quality standards of products and services provided by a domestic business is relatively low. Conversely, the quality standards of international business are very high which are set according to global standards.
  4. Domestic business deals in the currency of the country in which it operates. On the contrary, the international business deals in the multiple currencies.
  5. Domestic Business requires comparatively less capital investment as compared to international business.
  6. Domestic Business has few restrictions, as it is subject to rules, law taxation of a single country. As against this, international business is subject to rules, law taxation, tariff and quotas of many countries and therefore, it has to face many restrictions which are barriers in the international business.
  7. The nature of customers of a domestic business is more or less same. Unlike, international business wherein the nature of customers of every country it serves is different.
  8. Business Research can be conducted easily, in domestic business. As against this, in the case of international research, it is difficult to conduct business research as it is expensive and research reliability varies from country to country.
  9. In domestic business, factors of production are mobile whereas, in international business, the mobility of factors of production are restricted.

Conclusion

Carrying out the activities of international business and its management is far more difficult than conducting a domestic business. Due to changes in political, economic, socio-cultural environment across the nations, most business entities find it difficult to expand their business globally. To become a successful player in the international market firms need to plan their business strategies as per the requirement of the foreign market.

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Comments

  1. Nik says

    August 16, 2018 at 8:18 pm

    Wow

    Reply
  2. Sanjay Meena says

    December 10, 2018 at 10:03 pm

    i can easily understand the meaning features and differentiation…. its just WOWW

    Reply
  3. Atik says

    January 21, 2019 at 2:43 pm

    it’s so helpful. thanks for support

    Reply
  4. Stitchphile says

    March 9, 2019 at 1:50 pm

    Killer article by the way

    Reply
  5. Abhi sen says

    March 11, 2019 at 9:07 pm

    Its osm learn to easy its wow
    Sipmle and short answers

    Reply
  6. ShIvam says

    March 15, 2019 at 8:12 pm

    Easy to understand …..the collection of words are good due to this the meaning and definition become very easy to understand …………good .

    Reply
  7. batth says

    July 8, 2019 at 11:49 am

    great

    Reply
  8. ahmad hanafy says

    October 24, 2019 at 5:38 pm

    its vey helpful to understand international business

    Reply

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